Legal Case Studies

DEFENDANT PROBLEMS AT STAGE 3



This note has been produced in order to highlight the issues which cause defendants’ offers to be beaten at Stage 3 hearings and to suggest some solutions which may be adopted to ‘stop the rot’.

Experience shows that defendants will normally lose a Stage 3 hearing (whether paper or oral). That can be for a variety of reasons, but the problem is not at Stage 3 of the Process – it’s at Stage 2.

It’s no secret that defendants’ general damages offers are often lower than the JC Guidelines. That is on the basis that more claims settle than do not and so the increased costs payable in those cases which do go all the way (and lose) are more than compensated for by the aggregate ‘saving’ on damages agreements made in the majority of cases.

It is particularly important in relation to Process claims to remember the philosophies, or aims, of the Pre-Action Protocols because they are the drivers of the Protocols’ provisions, including those at Stage 3 and they shall inform (in conjunction with the overriding objective) how the court determines disputes.

The stated aims of both the RTA and the EL/PL Protocols are:

The aim of this Protocol is to ensure that—

  1. the defendant pays damages and costs using the process set out in the Protocol without the need for the claimant to start proceedings;
  2. damages are paid within a reasonable time; and
  3. the claimant’s legal representative receives the fixed costs at each appropriate stage.

Issues Peculiar to Process Claims

Some pervasive things to remember in relation to Process claims are:

These are the most prevalent issues we see arising which cause defendants to lose at Stage 3 hearings:

  1. Outsourcing certain heads of loss to third parties, for example
    1. Loss of earnings claims to forensic accountants and/or;
    2. Hire/storage & recovery claims to panel firms or specialist in-house departments
  2. Offering £0 where something has already been paid
  3. Not making top/realistic offer first
  4. Not making ‘protective’ offers
  5. Requesting information in Settlement Pack Response and not making any offer therein pending receipt
  6. Failing to explain why the information/documentation has been requested and what the consequence should be of a failure to produce it
  7. Not explaining reductions/£0 offers with comments in the Settlement Pack Response
  8. Not checking the accuracy of the CPP when sent by claimant for approval
  9. Not nominating solicitors to accept service of proceedings
  10. No ID given to expert and therefore making no offers
  11. Making a very low GDs offer on LVI grounds

Below, we set out in more detail a summary of those problems and our suggestions as to how they may be remedied.

Outsourcing

The Problem

This causes delay and, ultimately, the defendant’s offer to be either £0 or some alternative, unsubstantiated sum. Consequently, the defendant’s overall offer and position are not protected. In the absence of an explanation from the defendant in the relevant comments box, the claimant is guaranteed success at Stage 3. An explanation is invariably absent – at most it would be something like ‘we have instructed [insert third party name] to deal with this – they’ll be in touch.’

That is a green light for Stage 3 as far as a claimant is concerned – a well-advised claimant will issue proceedings immediately - success is virtually guaranteed for the claimant (assuming the claim remains in Stage 3).

Potential Solution(s)/Suggested practices/procedures to adopt

Agree SLAs with specialists advisers, whether they are internal or external for them to respond to you within appropriate timescales. Use your diary system to chase. Make sure that if you do not get something definitive from them before the deadline for responding to the Settlement Pack, you insert something into the comments box which explains what you think should be produced in order for that head of loss to be proven and that, if not produced, the claim is not proven and so nothing should be allowed for that head of loss.

Alternatively, compensators may wish to invest in up-skilling handlers to deal with as many of these issues which are typically outsourced themselves as possible.

Heads of Loss Already Paid

The Problem

A defendant’s Part 36 Section II offer (‘Protocol offer’) for the purposes of determining what costs order to make at Stage 3 is the total amount of all sums offered in the Settlement Pack Response – those sums find their way into ‘Part B’ of the CPP. If you exclude sums already paid, the defendant’s offer will appear to be lower than it actually is.

Potential Solution(s)/Suggested practices/procedures to adopt

If a head of loss is admitted/agreed as claimed (or in some other amount) by all means say so in the ‘comments’ box (including when it was paid), but make sure that you insert the actual amount agreed in the correct box for that head of loss otherwise your offer will appear to be lower than it actually is- it is effectively the same as making an offer ‘gross’ of interim payments.

Best Offer First

The Problem

This is similar to the ‘outsourcing’ issue identified above. There is no obligation on the claimant to negotiate. Once you have responded to the Settlement Pack, the claimant may issue the CPP/PD 8B proceedings (probably with impunity) – responding to the Settlement Pack is the starting gun for the Stage 3 race.

We often receive instructions with comments like this ‘We would have offered £x if the claimant had negotiated, but they just issued the CPP’.

If you then make a further offer/accept theirs, you will have to pay the Stage 3 costs, even if court proceedings have not yet been issued.

Potential Solution(s)/Suggested practices/procedures to adopt

This is probably a problem that defendants must simply acknowledge. Whilst anecdotally, we all know who these people are, interrogation of any MI which may be available is important here to identify particular firms or particular handlers within those firms who fail to negotiate. Appropriate claimant firm-specific procedures and protocols can be implemented.

We would not advocate making your top offer first in all cases, but please see below under ‘Protective offers’.

‘Protective’ Offers

The Problem

Defendant’s offers are almost exclusively ‘bare bones’ – the sum total of the amounts offered for each head of loss is the defendant’s highest offer. The consequence is that where you lose by only 1 penny on just one head of loss, even if the court allows exactly what you have contended for in the Settlement Pack response for all other heads of loss, you still lose and you still pay Stage 3 costs (and own solicitors’ costs and disbursements).

It is our experience that judges cannot help themselves but to ‘split the difference’. So if the claimant claims, say, £20 for miscellaneous expenses and the defendant’s offer is £10, it is reasonable to expect that a judge will allow £15.

Potential Solution(s)/Suggested practices/procedures to adopt

It is possible to argue for less in respect of each head of loss (or any particular head of loss) but offer more overall i.e. arguing for less in the table, but offering more in the ‘offer’ box. In fact, the protocol itself envisages that - see paragraph 7.41 of the protocol.

It might be sensible to always offer £0 for miscellaneous expenses (where usually £10 is offered) and argue in the comments box that ‘We offer nothing for speculative, undocumented expenses’, but allow that £10-£20 in the overall offer – you then buy yourself that extra bit of protection on other heads of loss if you succeed in that argument.

The problem with that solution is that you may end up paying more on all claims if the overall offers are accepted (although the claimant’s solicitors might not have the wherewithal to check the total amount offered).

Requests for Information/Documentation

The Problem

This is largely identical to the outsourcing problem set out above.

Potential Solution(s)/Suggested practices/procedures to adopt

As above.

Explanation of Request

The Problem

This is largely identical to the outsourcing problem set out above.

Potential Solution(s)/Suggested practices/procedures to adopt

As above.

Comments

The Problem

At the time of responding to the Settlement Pack, handlers will not know whether the claim will settle or not or, if it doesn’t settle and goes to Stage 3, whether it will proceed to a paper hearing or an oral hearing.

The worst-case scenario is disputing (or offering £0 in respect of) a head of loss, not commenting on it and the case then goes to a Stage 3 paper hearing. A defendant cannot then expect to get a reduction to the amount claimed, even less can they expect to get a disallowance of that head of loss.

Even if the claim proceeds to a Stage 3 oral hearing, a judge may refuse to permit the defendant’s advocate to expand on points made or make new points if they are not included in the comments box at Stage 2.

Paragraph 7.57 of the RTA Protocol provides: ‘Comments in the Court Proceedings Pack (Part A) Form must not raise anything that has not been raised in the Stage 2 Settlement Pack Form.’

Potential Solution(s)/Suggested practices/procedures to adopt

Always complete the Settlement Pack Response in the mind-set that the claim will proceed to a Stage 3 paper hearing. In doing so, you will be aware that there will be no–one at the hearing to explain to the judge what your comments mean, why you need certain information/documentation (assuming you’ve asked for some) and/or why you have made a particular offer/offered £0.

Indeed, you should write as if you are the advocate at the hearing explaining these things to the judge. For example, for general damages, try to include reference to comparable cases and highlight mitigating factors in the medical evidence (e.g. no time off work, no help needed with household chores, injuries described as moderate only or not described as severe if not description given in that respect); for physio charges, dispute in commentary admin/triage fees on the ground that they’re not recoverable – physio was recommended by the expert (if it be the case) and so triage not required); for loss of earnings, contend (if it be the case) that there is no evidence a loss was actually suffered and so in the first instance the court should disallow the amount claimed (this usually applies in particular to loss of earnings claims where the claimant is self-employed) etc.

In the light of paragraph 7.57/7.49, we suggest including in the relevant box of the Settlement Pack Response any relevant comments made in letters/emails/over the telephone during negotiations.

Accuracy of CPP

The Problem

We have encountered occasions where:

Whether these things have occurred deliberately or by error, they are nevertheless prejudicial to the defendant’s case at Stage 3.

The defendant arguably has only one opportunity to dispute the content of the CPP – any dispute must be raised within 5 working days of receipt from the claimant. Otherwise, the opportunity is likely to have been lost for good (short of applying to remove the claim from the Process).

Potential Solution(s)/Suggested practices/procedures to adopt

It is vital that CPPs are checked for accuracy and completeness and, if any inconsistencies are identified they must be raised with and explained to the claimant within 5 working days.

In particular, make sure all relevant comments you have made in the Settlement Pack Response are included in the relevant ‘comments’ boxes for each head of loss and that you have nominated solicitors to accept service of proceedings.

Nominating Solicitors

The Problem

Solicitors are either not nominated, or nominated too late and the claimant’s solicitors therefore have the court proceedings served on the compensator/its insured. That causes potentially prejudicial delay, as well as undue concern and stress on the part of the defendant him/her/itself.

Potential Solution(s)/Suggested practices/procedures to adopt

Ensure that the instruction of the relevant panel firm is notified to the claimant’s solicitors at the earliest opportunity. The latest time at which you can do this is when considering the CPP at the end of Stage 2/beginning of Stage 3.

ID Check

The Problem

We have received a couple of cases where an offer of £0 has been made for GDs (or all heads of loss) because the claimant did not provide a means of identification to the expert.

This is a legitimate consideration for claim validation, but there must be a realisation that: 1) failure to produce ID to a medical expert will not be sufficient in itself for the court to make a finding that the person examined was not the claimant; and 2) the Process is not the appropriate forum for such issues to be determined in any event (if there is additional evidence of fraud).

Potential Solution(s)/Suggested practices/procedures to adopt

There is no requirement for a claimant to provide ID to the expert. Issues in this respect should first be raised by email/message on the Portal and, if no satisfactory response received, then consideration must be given as to whether to drop the claim from the Process blaming the claimant’s/claimant’s solicitors conduct and seeking a costs order under CPR 45.24.

Indeed, that latter point (about removing from the Process and CPR 45.24) goes for any issue where more information/documentation is reasonably requested but not produced.

Causation

The Problem

Making an offer which is clearly below what one would normally expect to be a reasonable allowance in the light of the evidence available (usually the prognosis given by the medical expert) on the ground that, for example, the impact was low velocity or the claimant was exaggerating/had a pre-existing condition. Such an argument of course goes to causation, but the court cannot determine such an issue without more evidence than is typically available or may be relied upon in the Process at a Stage 3 hearing. Without supporting evidence, causation arguments of this ilk are doomed to failure.

Potential Solution(s)/Suggested practices/procedures to adopt

A withdrawal of the admission of causation will cause a claim to be automatically removed from the Process.

The reality is that if a compensator wants to make such arguments, without compelling evidence which has been exchanged in the Process (in which case it would be more effective to request an oral hearing), the compensator will have to withdraw the claim from the Process.

That said, there is probably a greater deal of flexibility with an oral hearing for the party’s advocates to at least expand on points already made, if not to make new ones.

There may be flexibility at an oral hearing for counsel to explain what has happened, but a belt and braces approach is always to be advocated.

There is a mirror provision in the EL/PL Protocol – paragraph 7.49.


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